Maximise your tax return with these lesser-known tax deductions
With tax time here again, here are some of the most overlooked expenses you may be able to claim as a tax deduction, to reduce your taxable income.
With the end of the financial year just around the corner, there’s a lot to get done when it comes your tax affairs—whether you’re an employee, sole trader or a small business owner.
One key thing to get right when completing your return is to make sure you don’t miss out on deductions you can claim in relation to expenses, especially those linked to your work.
While many of these deductions, like work-related car expenses, self-education expenses and phone and internet expenses, are commonly known, others can be easily overlooked.
Here are some expenses you might be able to claim:
With COVID-19 leading to a surge in people working from home, there’s now a temporary 80 cents per hour all-inclusive claim amount available to employees for running expenses.
Under current ATO rules, the claim period is limited to between 1 March 2020 to 30 June 2021, but remember you’ll need the relevant documentation, like rosters or a diary, that can show you worked from home over the period you’re claiming.
Similarly, if you’re one of the thousands of workers across the country who shifted to working from home in the pandemic, you may be able to claim home office expenses. The big thing to get right here: You must have part of your premises set aside strictly for business purposes, and you’ll need to prove that to the ATO if required.
Be careful—if the tax office comes knocking, they may look at factors like whether your space is identified as a place of business, and how much time each week it’s used for business when assessing your eligibility to claim.
TV subscriptions, journals, magazines
Here’s some good news: your favourite streaming services and magazine and journal subscriptions might be claimable, depending on what sector you work in, and if the subscriptions in question are needed for your work. If you work in media or the arts, these types of subscriptions are more likely to be claimable.
If you’re one of the thousands of Australians who holds membership with a trade union or industry association, under ATO rules you can claim these expenses as a deduction.
This covers not only union fees, subscriptions to trade, or fees paid to business or professional associations, but also the payment of a bargaining agent’s fee to a union if a new enterprise agreement has been negotiated on your behalf.
Another often overlooked expense you can claim is the cost of cleaning protective clothing, occupation-specific clothing, or uniforms.
Don’t get fooled though. Regular work clothes don’t constitute a ‘uniform’ no matter how often you wear them. For example, you won’t be able to claim just because you’re a waiter who wears black trousers and a white shirt to work, or a business person who wears a suit.
The tax office lets you claim $1 per load of laundry if it’s exclusively work clothing, or 50c per load if there’s a mix of work and casual clothes.
The same thing goes if you’re keen to claim a deduction for the cost of buying these work-related clothes. They must be closely linked to your job—items like fire-resistant and sun-protection clothing, hi-vis vests or steel-capped boots, overalls and gloves for tradies.
Managing your tax affairs
If you’re one of the many workers nationwide who used a tax agent to prepare and lodge your tax return, you can claim the amount you paid for the services on your return.
In addition to claiming the cost of the tax agent’s services, you can also claim a deduction in relation to buying tax reference material, dealing with the ATO in relation to tax affairs, or buying software that helps you to prepare and lodge your tax return.
2020-2021 tax lodging will open shortly through MyGov, and the deadline for personal filing is October 31. For more information, visit the ATO website.
Information provided in this article is of a general nature only and we have not taken your personal financial objectives, situation or needs into account. We recommend you consider if you need to seek professional financial advice before making any financial decisions.
This article is issued by Simple Financial Choices Pty Ltd (ABN 58 629 890 900; AFS Representative No. 001269407), a Corporate Authorised Representative of True Oak Investments Ltd (ABN 81 002 558 956; AFS Licence No. 238184), as the Sub-Promoter of Simple Choice Super. Simple Choice Super is a sub-plan of the Grosvenor Pirie Master Superannuation Fund – Series 2 (ABN 32 367 272 075; RSE Registration R1001204), which is marketed under two brands – Simple Choice Super and Slate Super. Visit our website or call us on 02 8074 1772 or email us at [email protected] to discuss your superannuation.